Is protectionism the new world order – and does it make economic sense?

INDUSTRY VIEW

20 December 2018

Ricardo Evangelista, Senior Analyst, ActivTrades

Ricardo Evangelista, Senior Analyst at ActivTrades, reflects on a changing world and the unique challenges and opportunities it brings investors.

In an interview with Business Reporter’s Alastair Greener, ActivTrades’ Senior Analyst, Ricardo Evangelista, discussed how an evolving economic and political world was slowly but steadily changing the international order that emerged after the Second World War. This is perhaps a consequence of nationalism and economic protectionism being on the rise through the hands of populist movements that have challenged the political status-quo, says Evangelista. “This is possibly the result of globalisation, the shift of jobs from West to East, the rise in inequality, civilizational clashes, mass migration and the deterioration in living standards for the majority throughout the developed world,” he explains.

Evangelista further notes that Europe faces the necessity to integrate further at a time of growing nationalism and populism, which may ultimately pose an existential threat to its very existence as a bloc. He adds, “In the US, President Trump’s protectionist agenda may prove popular with large segments of the electorate, but risks starting an all-out trade war with China, undermining global economic growth. In the meantime, Britain is on hold trying to decide which future path to take: staying closely linked to Europe or completely cutting ties. A process that is proving to be complex in a country where political parties, and society in general, are divided and more polarised than ever.”

During these interesting times, Evangelista advises that businesses must remain both alert and flexible. He further emphasises that, while change is painful, it also represents an opportunity to evolve. “To succeed it is fundamental to understand the political and social dynamics underlying our times – changes in the regulatory environment, geopolitical shifts, social trends and the new expectations they bring. In Britain, the greatest challenge is posed by Brexit and the uncertainty surrounding the future relationship with Europe, and with the rest of the world.”

Evangelista concludes the interview by underlining the need for businesses to accelerate preparations for Brexit and identify broad areas of concern. He elaborates: “In an economy that stretches so far beyond the physical borders of the country, many businesses will need to put contingency plans in place for relocation, licensing and recruitment. This is a time of opportunity, the businesses that embrace change and adapt accordingly will have a competitive advantage over the ones that don’t.”

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